The Role of Incentive Design in Parliamentarian Anti-Corruption Programmes

The “first wave” of donor sponsored anti-corruption programmes usefully focused on elaborating recommendations for parliamentarians or tried to train them (develop human capital) in anti-corruption. Now it time for these programmes to take into account parliamentarian incentives to adopt these recommendations and/or use this “knowledge.” This paper will discuss these incentives and the ways these programmes should and can help build political capital by managing voter demands, political competition, patronage, and enforcement. The paper also reviews some basic theories from formal political economy which may be of interest to practitioners interested in bridging the theory-practice gap.anti-corruption, incentive design, incentive compatibility

What Does the UN Convention on Corruption Teach Us About International Regulatory Harmonisation?

Should international institutions promote international regulatory harmonisation? This paper will present arguments, looking at the UN Convention Against Corruption, noting that international institution regulation may play less of a harmonising role that it ostensibly appears to. Section I discusses the underlying motivations for harmonisation, presenting three views of regulation based on the likely effects of 'globalisation' and noting most views support global harmonisation. Section II will discuss specifically the UN Corruption Convention and compare the Convention (which aims at global harmonising of certain practices against corruption) against its ideals and an optimal regulation. Section III will discuss the influence of regulatory 'clubs' (such as the OECD or OAS Corruption Conventions) and show how regional harmonisation may be superior to global harmonisation in terms of reaching an ideal and optimum. Section III will address how global harmonisation may be deleterious to national interests and will discuss how such global harmonisation may be 'domesticated' in the nations' laws and moeurs. Because business practices depend on a wide range of influences in the national business system, attempts at harmonisation are at best 'ambivalent'.

Playing the Shadowy World of Emerging Market Shadow Banking

For emerging market regulators, shadow banking represents an activity which they must control. For businessmen in economies like Russia, Argentina, Saudi Arabia and Mexico, shadow banking represents an important business opportunity. By extending credit to risky (but promising) activities through shadow banking, financiers in these economies can earn far higher returns for excess-cash than placing it in cash management accounts. In this brief, we describe ways that cash-rich individuals and companies can use shadow banking activities to help themselves (by earning more money) and help the economy (by extending credit in these traditionally credit-starved economies). Some of these activities include issuing debt which shadow bankers use as collateral, chopping project-lending into privately-placed share offerings, investing in trade, real estate and insurance securities as well as centring shadow banking activities in regulation-friendly jurisdictions

Who Is Your Company? Where to Locate to Compete in Emerging Markets

Who’s your city? For companies in the developing world, this question determines their market sizes, access to innovative ideas, regulatory environment and proximity to innovative staff. In this brief, we identify the most attractive metropolitan areas to locate in to sell in emerging markets. Taipei, Istanbul, Johannesburg, Santiago, Buenos Aires, Sao Paulo, St. Petersburg, Moscow, Shanghai and Beijing comprise our top 10 list. Close runners-up include Bangkok, Kuala Lumpur, Mumbai, Cairo and others. We describe how companies can work with local governments to provide a more attractive business environment in these emerging metropoli. Some ways including providing resources for airport development, working with government on business simplification, encouraging the free movement of persons (by lowering visa requirements), helping to build out infrastructure around the airport and working with local academics

Does Objectives-Based Financial Regulation Imply A Rethink of Legislatively Mandated Economic Regulation? The Case of Hong Kong and Twin Peaks Financial Sector Regulation

Objectives-based legislation – or laws which focus on achieving particular and concrete outcomes – has become a new and important tool that financial sector regulators use to tackle large and varied financial system risks. Yet, objectives-based legislation – and the frequent principles-based regulation underpinned by such legislation – represents a stark departure from traditional ways of legislating. In this paper, we describe the problems and prospects of implementing objectives-based financial regulation in Hong Kong – in the form of a Twin Peaks regulatory structure. A focus on the objectives of achieving financial market stability and proper market conduct would require a different approach to legislating and regulating in Hong Kong (and most other countries). By describing the way Hong Kong’s legislators would adopt such objectives-based legislation putting a Twin Peaks regulatory structure in place, we hope to shed light on the broader trend in academic and practitioner circles toward thinking about how to use objectives-based legislation to tackle complex social risks. Such an approach may also reduce the use of patchworks of complex inter-agency agreements and rulemaking between traditional regulators as they try to solve large and difficult regulatory problems

What Does Brunei Teach Us About Using Human Development Index Rankings as a Policy Tool?

The Bruneian Government has set an ambitious target to achieve a top 10 ranking on the UNDP’s Human Development Index (HDI) by 2035. To achieve its objective (described in a national strategy document called the Wawasan 2035), Brunei’s economy needs to grow by 6%-7%. Is setting an HDI target a good way to govern Brunei’s policymaking? Is it a good way to govern any country’s policymaking? In this paper, we look at the role HDI-rank targets play on economic and fiscal policy. We show that such a headline target (much like a profit target in a private company setting) automatically sets targets for growth in various economic sectors and fiscal policy targets. As such, HDI-rank targeting may provide a useful mechanism for co-ordinating development policies and for monitoring progress against a wide range development goals using only one number

Last of the Tai-Pans: Improving the Sustainability of Long-Term Financial Flows by Improving Hong Kong’s Corporate Governance

Hong Kong leads the rank tables as an international financial centre. However, the data indicate that some parts of her corporate governance arrangements probably detract from – rather than contribute to – that leading position. In this brief, we show how excessive shareholding concentration, probably self-dealing, insufficient minority shareholder recourse to mechanisms aimed at protecting their investments, and Hong Kong’s close links with several “tax havens” probably weaken Hong Kong’s role as an international financial centre. We present 18 recommendations aimed at increasing the volume of international financial capital coming to the city by improving Hong Kong’s corporate governance

The Middle Eastern Wealth Management Industry: Boon or Bust?

The wealth management industry has expanded greatly in the Middle East -- following the fortunes of wealth itself. How can wealth managers identify and grow their portfolios in this region? What policies can they push for in order to build wealth management and private banking services? What threats does ordinary retail business pose to the premium model

Bubble Economics How Big a Shock to China’s Real Estate Sector Will Throw the Country into Recession, and Why Does It Matter?

How far do China’s property prices need to drop in order to send the country into a recession? What does this question tell us about the way Bubble Economies work? In this paper, we develop a theory of Bubble Economics – non-linear and often “systemic” (in the mathematical sense of the word) forces which cause significant misallocations of resources. Our theory draws on the standard elements of most stories of Bubble Economics, looking at the way banking, construction, savings/investment, local government and equities sectors interact. We find that Bubble Economies’ GDP growth can depend on property prices changes differently at different times -- depending on risks building up in the economy. We argue that a tacit, implicit Bubble Risk Factor might provide a way of understanding a key variable academics and practitioners omit when they try to explain how economies (mis)allocate resources during bubbles. A 15%-20% property price drop could cause recession, if China’s economy resembles other large economies having already experienced property-related asset crises. However, a 40% decline would not be out of the question